The Economics Of A Viral Blog (2015)

What a two person blog can make off understanding the Facebook algorithm.

Quick Note: With all the Facebook algorithm changes in the past 2 years, this business model no longer makes any sense. Was fun while it lasted :)

I told myself about five years ago when I started blogging that I never wanted to rely on page views for my livelihood.

Fast forward to today and that's exactly where I find myself: running a moderately successful viral blog, with an income completely dependent on page views.

Given, I learned a lot about blogging in the interim and there was a major development in how publishers get traffic. Namely Facebook and its updated News Feed Algorithm have made it significantly easier to drive a ton of traffic to an article.

You can drive literally millions of pageviews where four years ago you might be lucky to get 1,000 for a very similar piece of content.

With that in mind, it's fair to say the good people at Facebook basically determine whether I eat next month, go on vacation, or get to keep living in the style to which I've grown accustomed.

It's scary, frustrating, and fun. And, since I've never once seen a write up on the economics of running a site like this, I'm going to show you what happens behind the scenes for the first time ever.

What comes next is a cross between a year in a review (or at least the seven months that we've been running the blog) and, quite literally, our income statement.

Revenue: $/User If Awful, But We Have A Lot Of Users

As you can see, we've accrued over $160,000 in revenue during the seven and half months we were live this year. On five million monthly users, that's a very hefty $0.03 per monthly user in annual revenue. For a quick laugh, you can compare that to LinkedIn's $28 per monthly user in annual revenue. That's 933x better than us.

Anyways, all of our revenue this year, save for a $100 rebate for opening a credit card, came through programmatic advertising on the site.

If you're not thinking to yourself that the previous sentence is horrible, then you don't have any concept of risk. Getting all of your revenue from a single source is never a good idea, but we do it for now until we determine a way to monetize traffic more effectively.

On the bright side of programmatic, you get paid on a super reliable schedule with zero hassle. Here's a list of the networks we use, when they pay out, and the approximate percentage of revenue:

Google AdSense (Net 30) -- 76%
Taboola (Net 45) -- 13%
Criteo (Net 30) -- 6%
PropellerAds (Net 7) -- 4%
Teads (Net 30) -- .5%
Media.net (Net 30) -- .5%
Matomy (Net 30) -- 0%

I learned very quickly what "Net X" means -- you get paid for whatever you earned X days after the close of the month. I never really cared about cash flow until then. #FunStartingABusiness.

Why All Viral Sites Have Spammy Ads And How We Sleep At Night

The quick summary: we trade marginal profit for pissed off users.

My co-founder and I wrestled with the quality of the ads on the site for a long, long time before being resigned to our current situation. The problem comes from two ad networks which I'll discuss in a bit of quick detail (Even if that's an oxymoron):

Taboola
PropellerAds

Taboola

The issue with Taboola is just the god awfully spammy looking ads. They don't send you to sites with malware or sketchy products, but OH MY GOSH those ads. Here's a screenshot from the first article on the site at the moment (and this is pretty tame):

So why do we keep Taboola?

10% of revenue is about $15,000 in seven months. That's all marginal profit. (Only 10% of revenue because the opportunity cost is another Google ad, but the difference in performance is pretty big.)
Believe it or not, our share rates went up for the article with Taboola ads placed on them. My theory, people expect to see these kinds of ads on "official" online magazines. Hooray Internet!!

I'd ideally run Outbrain ads on the site, but they require 10 million pageviews a month.

Propeller Ads

Ever been to The Pirate Bay? Me neither ;)

But, from what I've heard, they have ads that appear under the browser after you click on something or stay on the page long enough. The "industry" calls these ads, normally for FanDuel or a chance to win a new iPhone, "Pop Unders".

Let me tell you, there's no better way to piss people off ...And make a bunch of money ...than to use them on your site.

Our article see a 25% decrease in share rate when we have them running, but a doubling of the eCPM (From about $3-4 to $6-7).

So we compromise and only show them on articles after the virality dies down and the articles are fading away into the internet afterlife. This just speeds up the dying process, albeit it a bit more profitably for us (And again, this is all marginal profit since there's no cost).

Costs: Money Out My Pocket. Something Something To Make Money.

Running a viral site from a business perspective is incredibly complicated. I mean, look at this formula:

Profit = Ad Revenue - Writer Cost - Promotion Costs - Other, Small Random Stuff

Sheesh, I'll let you catch your breath.

You know what's pretty awesome: our hosting costs. They come out to $500 a YEAR. That's so friggin cheap I don't even include it as a real cost!

We use DreamPress by HostPress and have had 0 downtime. They've handled over 4,000 concurrent users and 30,000,000 million page views in seven months. That's $0.0000117/pageview!!!

Writer Costs: Scaling Quality Content Costs Money

The single biggest hit to our bottom line is the cost of producing the content -- ~30% of revenue.

We don't produce shit content like some people (Cough***OnlyInYourState***Cough) -- everything is original research. And for as click-baity as some people would like to call it, we put a ton of time and effort into each article.

Well, except curated videos. We are super spammy, click-baity when it comes to that and there's zero way it'll last much longer.

Anyways, since we're bootstrapped, we pay all writers based on performance -- they get 50% of revenue above promotion costs for the first ten days an article is live.

It nets out to essentially $100/article with some writers making significantly more and some making less.

I actually don't really have any comps for the industry, but I think that's pretty good pay for the 3-4 hours it takes to write an article for us (would love input on this if anyone's willing to share).

Promotion Costs: Your Content Isn't Worth Anything Until People Read It

The only other major expenses we have are promotion costs. They amount to about 15% of revenue.

The costs go into two buckets which I've broken down into their percentage cost for marketing:

Facebook -- 85%
Manual promotion / Public Relations -- 15%

For any type of content marketing, these are your bread and butter traffic drivers.

Our list of promotional techniques is somewhat interesting for what it lacks -- Twitter and Email Marketing.

Twitter doesn't drive traffic in the short term. Full stop. Period.

Since they display tweets chronologically, it can't drive any direct traffic. Everyone on Twitter, stays on Twitter

Ignoring my bit of a rant, I've heard if you have a big enough following on Twitter, your followers can spread it to Facebook and you can get traffic. Something like:

Social Media Manager For X Follows You On Twitter > Sees Post > Posts the Post on Twitter and Facebook > Facebook drives traffic

I don't know how to build this kind of Twitter following; I should probably learn.

On email marketing, it doesn't quite fit the theme of our site. Everything we do is so region specific that an email only applies to you twice a month.

That being said, we have collected ~1,300 email addresses and emailed them... twice.

So you know, there's that $5 in revenue right there.

Facebook Advertising: The Only Way To Avoid The Continuously Diminishing Reach Of Pages

Much like I have no idea how to build a Twitter following, I have no idea how to build a Facebook following.

At least, for content that has no central theme.

So, we take a shortcut and just pay for promotion on Facebook. Over the course of my life, I've spent over $250,000 on Facebook advertising.

I've seen so many iterations of Facebook's Power Editor and Ads Manager that I dream about them. Well, mostly nightmares.

This year we spent ~$21,000 on Facebook at a CPC of $.07.

I've heard that's pretty good, but people never tell you this stuff.

Manual Promotion: The Internet Hussle

Half of the equation to promoting your content on the internet just comes down to hustle.

If you hustle more than everyone else, you'll win. Plain and simple.

We have a part time Public Relations manager. She works about a quarter to half time each week promoting our content to blogs, newspapers, and radio stations.

For $4,000, we've built a contact list of about 2,000 influencers around the country.

Other Costs: Tools and Accountants And... Nothing Else Really... On My!

I lump everything else into this category as it's easier for my mental accounting.

These costs are basically the admin costs for running a site like ours and amount to about 10% of revenue.

Tools: The Stuff That Makes The Site Go

Here's a list of the tools we use and a sense of cost for each:

Hosting - $40/mo
BuzzSumo - $90/mo
SumoMe - Free (Although we probably owe Noah like $3,000 for our hit on his server)
Gmail For Business - $45/mo for 3 users

So that's less than $200/mo in recurring costs for the tools that let us generate content for the site and have it run.

I'd imagine that's pretty lean and we only started paying for BuzzSumo this month (We got away with the free version for 6 months somehow).

Accounting -- Bench.Co and Their Recommended Accountant

Bench makes keeping your books super east for $135/mo. Would recommend them based on their ease of use and customer service... if you're slightly bigger than us.

Our business is so simple, I'll probably cancel our account next year unless we come up with a more complex business model. I didn't really know what goes into a income statement and balance sheet until working with them. And now that I've seen it, I've realized I've been keeping an income statement since the beginning anyway.

I'm also using an accountant recommended by Bench since I have a pretty complex tax situation this year, but would only need TurboTax in a normal year.

Looking To 2016 And The Future

My co-founder and I had a blast running the site in 2015. It's great not to have a boss or be responsible to anyone for yourself.

That being said, if we want to make this business last more than 2 years we are going to need to diversify our revenue sources. And that my friends, is the goal of 2016: make money from something besides ads.

We have a couple of ideas in mind that'll be testing over the next several months that include:

Consulting
Selling Products
And leveraging the site's growing authority

So if you're looking to get traffic to your site, send me an email and you can end up in our 2016 round up ;)